Collins Stewart chief backs New Star threat to sue FSA

Collins Stewart Tullett, the broker and fund manager, yesterday backed John Duffield, the chairman of New Star Asset Management, in his threat to sue the Financial Services Authority for defamation.

Collins Stewart Tullett, the broker and fund manager, yesterday backed John Duffield, the chairman of New Star Asset Management, in his threat to sue the Financial Services Authority for defamation.

The outspoken Mr Duffield wrote to John Tiner, the FSA's chief executive, earlier this month, threatening to sue the regulator for comments made by its senior press officer in relation to the split-capital investment trust débâcle. Mr Duffield took exception to one remark in the press, which said all 21 of the firms being investigated by the FSA had "ripped off consumers".

A spokesman for New Star said that if it decided to press ahead with legal action, it was likely to be joined by several of the 21, many of whom share their concerns. Terry Smith, the chief executive of Collins Stewart, said yesterday: "We're highly supportive of New Star's stance - we are very concerned about the remarks which appear to amount to a pre-judgement."

New Star said there had been a chain of correspondence between itself and the regulator in previous weeks, in which the FSA had insisted that its press officer had been misquoted.

One senior fund management chief executive said there were numerous examples of FSA comments, which seemingly pre-judged the 21 firms.

A New Star spokesman said: "We are deeply concerned that the FSA has pre-judged the whole issue of the splits investigation before it has even sent the evidence out, let alone before the cases have been heard through the proper channels."

A spokesman for the FSA said: "At no stage have we ever named any of the individuals or firms involved with this issue."

The news of the FSA's latest battle comes just days after it faced Legal & General in a preliminary hearing of the Financial Services & Markets Tribunal.

L&G are appealing against a £1.1m fine which the FSA is trying to levy against the insurer for the mis-selling of mortgage endowment policies. The main trial is due to begin in September. The FSA has come under fire in recent months for its particularly aggressive attitude towards the firms it regulates. Over the past 12 months alone, it has handed down almost £10m of fines. Firms involved in the recently concluded split-cap sector investigation believe the regulator has been calling their bluff over the substance of evidence that it claims to have against them.